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Canadian Council of Chief Executives

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Remarks Prepared for Energy Secretary Samuel Bodman

I am pleased to participate in today’s forum with such an impressive group of representatives from the Canadian business sector.

My earlier career in business, and my service in two other Cabinet Agencies, have given me a special appreciation for the unique, historic relationship that has always existed between our two nations, which is the subject I wish to speak about today. Canada and the U.S. are neighbors, of course. But our relationship, our partnership, goes much deeper than that.

As President Bush said during his trip to Canada in December, the U.S. and Canada have "always agreed on the great principles of liberty derived from our common heritage. We believe in the dignity of every human life, and we believe in the right of every person to live in freedom. We believe in free markets, humanized by compassion and fairness. We believe a diverse society can also be united by principles of justice and equality. The values we hold have made us good neighbors for centuries, and they will keep us as strong allies and good friends for the centuries to come."

The truth of this observation was put into bold relief just last week, in the wake of the devastation wrought by hurricane Katrina. Canada was the first foreign nation to offer aid to those trapped or displaced by the hurricane. In fact, the forty-six member Vancouver-based Urban Search and Rescue Team was the first rescue operation on the scene in the St. Bernard Parish, east of New Orleans. Its volunteers worked 18-hour days and rescued 119 people. Additional teams from Canadian power companies are among those helping to restore electricity to the affected areas. And four Canadian ships carrying essential and much-needed supplies, arrived in the Gulf a few days ago.

On behalf of President Bush and the American people let me say how much we appreciate Canada’s outpouring of support in ships, personnel, medical and other supplies, and money--including a pledge of $5 million for humanitarian aid from the Province of Alberta--to aid the victims of the hurricane.

A quick and generous response in times of need is one hallmark of good friends, of course. Canada has demonstrated that in the last few days.

But another sign of friendship is the quiet, steady, day-to-day interaction that goes almost unnoticed because it is so common, so woven into all that we do. Consider the great commercial bond our nations share. No two countries anywhere in the world engage in more trade with each other than we do. And energy is a significant part of that bilateral trade relationship. For example:

Canada is America’s leading supplier of imported oil, natural gas, uranium, and electricity.

The United States imports more petroleum products from Canada than from any other country--including 1.6 million barrels of crude oil per day, which is around 15 percent of our oil imports.

Net imports of natural gas from Canada into the United States represent about 16 percent of U.S. natural gas demand.

Canada also supplies electricity to over 30 U.S. states. Our cross-border electricity trade flows in both directions, and our systems are highly integrated.

On the subject of electricity, let me say a word about the blackout that occurred in August of 2003. I am sure many people in this room were affected by that incident, which had enormous costs in time, personal inconvenience, and lost business on both sides of the border. We must make every effort to prevent such an incident from happening again.

After the blackout, the U.S. and Canadian governments, working with industry, launched a massive investigation and collaborative effort to implement concrete steps for preventing or reducing the scope of future such events. The final joint U.S. - Canadian report was published in April 2004, with recommendations for 46 distinct actions to prevent or minimize future blackouts.

Since the report was published, we have made significant progress toward implementing those recommendations. Foremost among them is a commitment by the North American Electric Reliability Council--or NERC--to develop reliability standards in areas such as controlling tree growth near power lines, operator training requirements, and real-time diagnostic and analytic tools for managing power flows on the power grids.

The NERC also established a Reliability Readiness Audit program to verify that companies and organizations with responsibilities for real-time grid management have the training and equipment needed to maintain safe operations under unusual or adverse conditions.

As both the blackout and our subsequent close cooperation demonstrate, neither of our nations can address its energy concerns alone. Indeed, the energy challenges we face not only transcend our shared border, but are global in nature. The world-wide market in oil and gas, as well as the environmental impact of our energy use, mean that international cooperation must be central to addressing these challenges

That is why both the U.S. and Canada are enthusiastic members of the Carbon Sequestration Leadership Forum-- a multilateral effort that seeks to mitigate the climate change implications of coal-fired power plants--as well as the International Partnership for the Hydrogen Economy.

In these joint efforts, and many others, I should note that the Department of Energy has a very strong relationship with Natural Resources Canada. We meet regularly and are in constant communication at all levels throughout our respective departments. Both departments are committed to exploring ways to expand cross-border infrastructure development and trade, and to ensuring the continued security of our integrated systems.

In addition, since taking office, I have met with the premiers of Alberta, Manitoba, Quebec, Saskatchewan and the Yukon Territories, while other senior DOE officials have met with the premier of Newfoundland, to discuss ways to enhance our cooperation in energy matters.

I mention these relationships for the simple reason that energy trade cooperation is vitally important to both countries. In fact, one of the most important things we can do to promote the security, stability and reliability of the U.S. and Canadian energy sectors is to develop a genuinely integrated North American energy market.

Since taking office in 2001, the Bush Administration has worked to achieve a fully integrated single North American market -- one that will operate with transparent borders, promote economic development, and ensure a secure and reliable supply of energy for the citizens of all three countries on our continent.

In many ways, energy has already integrated our two economies, similar to the way oil and natural gas pipelines and electric transmission lines have integrated our energy infrastructures. Today, there are 35 cross-border natural gas pipelines, 22 oil and petroleum product pipelines, and 51 cross-border electric transmission lines that bind us together and increase the energy security of both our countries.

The Bush Administration has taken a number of steps to further enhance this framework of economic collaboration and energy integration. The most important of these was the establishment of the North American Energy Working Group in 2001.

We organized this group with our counterparts at Natural Resources Canada and the Mexican Secretariat of Energy to enhance regional energy cooperation. The North American Energy Working Group aims at the development of a truly integrated continental energy market that will guarantee reliable, affordable energy to all of our citizens. Just recently, the head of the U.S. Federal Energy Regulatory Commission met with his Canadian and Mexican counterparts for the first time, to address ways for streamlining and coordinating our regulatory frameworks.

Now there is a new initiative I want to mention that complements our existing work.

As you may be aware, on March 23, President Bush, Prime Minister Martin and President Fox announced the Security and Prosperity Partnership of North America at Baylor University in Texas. I am very pleased that the Council strongly endorsed this Partnership, through which the United States, Canada, and Mexico seek to develop a common security and prosperity strategy for North America, focusing on:

Securing North America from external threats;

Preventing and responding to threats within North America;

Streamlining the secure and efficient movement of legitimate and low-risk traffic across our shared borders; and

Promoting economic growth, competitiveness, and quality of life.

The Partnership is based on the principle that our prosperity is dependent on our security, and recognizes that our three great nations are bound by a shared belief in freedom, economic opportunity, and strong democratic institutions.

The past several years have been a challenging time for all of us involved with energy, both in government and in the private sector, but together I know we can find a way forward.

In this time of energy supply constraints, price volatility, and political uncertainty in some parts of the world, it is reassuring to know that the United States and Canada can count on one another for continued energy supply security and stability. If there is one message I want you to take from this meeting, it’s that the United States values and depends on Canada as an energy supplier, a trading partner, a neighbor, and an ally. And I want you to know that true to the spirit of the U.S.-Canada Free Trade Agreement and the North American Free Trade Agreement, Canada can continue to depend on a reliable, open U.S. market for its growing trade and investment ties.

We are two separate, sovereign nations; different, yes, but in many ways alike. And considering all that we share a border, an environment, not to mention common energy, economic, and national security challenges, there can be no question that ours is a shared destiny.

I thank you, not just for coming to Washington for this meeting, but for everything you do in the world of business to help foster that special relationship between our nations and our people.